Baht’s biggest rally since 1998 risks Thai tourism, exports

BANGKOK, 22 JULY 2026 —

Despite strong tourist arrivals, the tourism sector warned the strong currency would soon impact shopping and hotel spending. (EPA Images pic) BANGKOK: Thailand’s baht is on course for its biggest quarterly gain since the Asian financial crisis, threatening to derail a recovery in the nation’s key tourism and export industries.

The currency’s 10% surge against the dollar since the end of June, the most since the first quarter of 1998, has prompted calls from the tourism and hotel sectors, and business chambers to temper the rally. Commerce minister Pichai Naripthaphan and deputy finance minister Paopoom Rojanasakul this week urged the Bank of Thailand to take steps to rein in the currency and stem its volatility.

While the baht rally was driven largely by the US dollar slump ahead of the Federal Reserve’s rate cut on Wednesday, the outsized gain compared with the currencies of Thailand’s trade partners may prompt buyers to scout for cheaper sources, according to the Federation of Thai Industries.

While foreign tourist arrivals remain, it’s only a matter of time before the local currency’s strength squeezes shopping and hotel spending, according to the Tourism Council of Thailand. The strong baht is the latest challenge for new Prime Minister Paetongtarn Shinawatra, who has pledged to stimulate Southeast Asia’s second-largest economy and reduce cost of living.

While Thailand’s gross domestic product growth has trailed neighbours including Indonesia and the Philippines, its tourism and exports have been among the few bright spots in the economy. With Thai exports accounting for almost 60% of GDP, authorities have been exploring ways to sustain a recent pick-up in shipments.

The baht’s sharp gains are adding to private sector woes such as high production costs and a flood of cheap imports from China, Federation of Thai Industries Chairman Kriengkrai Thiennukul told reporters on Wednesday. “The rapid gains in the baht has made it even worse for exporters,” Kriengkrai said. “They are exhausted and it has become harder to survive.

What we want is a stable baht and help in dealing with high financing costs.” The Thai currency has moved in a wide range, making it difficult for exporters to conduct business, Paopoom said on Thursday. Steps should be taken to ensure that the baht “is not too weak, or too strong, and most importantly, not too volatile,” he said.

Soaring volatility BOT governor Sethaput Suthiwartnarueput said Friday the central bank is closely monitoring the baht and it doesn’t want to see high swings in exchange rates. The baht’s 3-month implied volatility against the dollar is at 9.12%, near its highest since January and more than the average 7.98% this year, according to data compiled by Bloomberg.

Foreign funds have poured in almost US$2.7 billion into Thai bonds and stocks this quarter, helping lift the currency and the main equities index. The baht was little changed at 33.078 to a dollar by 11:25am local time, heading for its eighth weekly advance in nine.

The baht’s rise may be among factors that BOT rate-setters will consider when they meet to decide on monetary policy on Oct 16, according to Nattaporn Triratanasirikul, an economist at Kasikorn Research Center in Bangkok.

“Coupled with the central bank’s rising concerns about asset quality, an uneven economic recovery and scaled-down boost from the government’s handout scheme in the near term, this does raise the odds of monetary policy easing in the coming months,” said Krystal Tan, an economist at Australia & New Zealand Banking Group Ltd. “It’s difficult to rule out a cut by year end.” The baht rally has yet to impact travellers but it could have a “psychological impact” on foreign tourists’ shopping and spending incentives, said Surawat Akaraworamat, vice-president of the Tourism Council of Thailand.

If the currency remains strong for long “it could affect the number of foreign tourist arrivals going forward as it incurs higher cost among tourists,” said Suksit Suvunditkul, president of the southern chapter of the Thai Hotels Association. For now, Thailand is on course to meet its target of hosting 36.7 million tourists this year and generate 2 trillion baht (US$60 billion) in revenue.

Arrivals have totalled almost 25 million so far this year, up 31% from a year earlier. (AI-assisted rewrite, based on the original source)

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